LONDON: US and European stock markets mostly fell on Thursday as US data showed inflation jumping to a four-decade high, raising concerns that the Federal Reserve may move more aggressively with interest rate hikes.
US consumer prices rose at an annual rate not seen since February 1982, with a 7.5 percent increase over the 12 months to January, according to government figures.
Wall Street's three major indices opened lower, with the Nasdaq shedding 1.5 percent as the tech companies listed there are more vulnerable to higher interest rates.
The "surprising acceleration" of consumer prices "boosted expectations of a more aggressive response from the Fed", said analysts at Charles Schwab investment firm.
In Europe, the Paris CAC 40 and Frankfurt DAX were down in afternoon trading following gains in the morning, but London's FTSE 100 was up.
Europe had its share of negative news as the European Commission cut the eurozone's economic growth forecast as energy prices and supply chain problems jack up inflation.
This followed what had been a broadly positive week for global equities thanks to some healthy earnings results, further reopening of economies and signs of easing Russia-Ukraine tensions.
Some Fed officials on Wednesday said policymakers would make their decisions based on data coming across their desks, with a 50-basis-point hike -- as opposed to the usual 25 basis points -- not off the table.
Surging inflation and bets that the US central bank will end its pandemic-era cheap cash policies have weighed on world markets in recent months, stalling a two-year rally that saw them hit record or multi-year highs.
The yield on the 10-year US Treasury note, a proxy for interest rates, hit two percent on Thursday for the first time since July 2019.
"The market isn't just concerned about inflation, it is also concerned about the Fed's response to inflation," said JJ Kinahan, chief market strategist at TD Ameritrade.
"Raising interest rates may be appropriate monetary policy, but that doesn't mean the market as a whole will react positively," he said.
Earnings boost - There is a feeling in some quarters that investors may be getting used to the prospect of higher borrowing costs, however, while still-strong economic data and the easing of containment measures will continue to support company earnings.
French energy giant TotalEnergies rebounded from the Covid crisis with a huge 2021 profit as oil and gas prices soared.
The company reported net profit of $16 billion following a $7.2-billion loss in 2020, when crude prices crashed.
Elsewhere, signs of progress on the diplomatic front in eastern Europe have kept a cap on oil price gains in recent days, as has the possibility of a revived Iran nuclear deal, which could see Tehran resume worldwide exports and ease supply problems.
Both main contracts were nevertheless higher Thursday, having rallied this year to their highest levels since 2014.
In other markets, oil prices rose while the dollar strengthened against other major currencies.
Key figures around 1435 GMT - New York - Dow: DOWN 0.7 percent at 35,513.88 points
London - FTSE 100: UP 0.2 percent at 7,654.59
Frankfurt - DAX: DOWN 0.1 percent at 15,466.40
Paris - CAC 40: DOWN 0.8 percent at 7,027.43
EURO STOXX 50: DOWN 0.5 percent at 4,183.14
Tokyo - Nikkei 225: UP 0.4 percent at 27,696.08 (close)
Hong Kong - Hang Seng Index: UP 0.4 percent at 24,924.35 (close)
Shanghai - Composite: UP 0.2 percent at 3,485.91 (close)
Euro/dollar: DOWN at $1.1406 from $1.1425 late Wednesday
Pound/dollar: UP at $1.3556 from $1.3535
Euro/pound: DOWN at 84.13 pence from 84.40 pence
Dollar/yen: UP at 116.19 yen from 115.52 yen
Brent North Sea crude: UP 0.9 percent at $92.42 per barrel
West Texas Intermediate: UP 1.1 percent at $90.68 per barrel
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